Commentary

The Right Mix for Retirement

Conventional wisdom dictates that as investors approach retirement their portfolio's asset mix should become more conservative. At first glance this appears to be reasonable, however, for many investors it may not be quite so clear-cut.

Based on World Health Organization (WHO) estimates (as of 2002) 60-year old Canadian men and women can expect to enjoy a healthy life until 76 and 79, respectively. This information helps to reinforce what many of us already know; our retirement years are incresing as life expectancy rates improve. What does this mean for you? The assets you have accumulated during your working life will need to support you for longer than previous generations of retirees, and perhaps longer than you have anticipated.

As with any change in personal circumstances investors should assess their needs and goals as they approach retirement to determine what, if anything, needs to be done to position their portfolios accordingly. Generally speaking, most investors entering retirement will likely look to their investment assets as a source of income. Faced with a retirement of 20 years or more, many individuals entering this stage of their life are likely faced with the competing needs of balancing income with future growth in order to fund their retirement for some time. Depending upon individual investment objectives prior to retirement, this could mean a significant shift in investment strategy and a move to include conservative income-oriented investment vehicles. For others it could be as simple as fine-tuning their existing investment strategy.

The best solution for you will be to ensure combination of stocks, bonds and cash in your portfolio is appropriate for your investment goals and risk tolerance. I can work with you to make certain you have a sound investment plan, which includes a well-diversified portfolio that is regularly rebalanced and incorporates your changing needs to help you achieve your long-term investment goals.

Please do not hesitate to contact us, should you have any questions or comments.

¹(Source : The Right Mix for retirement, by Martha Hill)

®"BMO" (M-bar roundel symbol) is a registered trade-mark of Bank of Montreal, used under licence. "Nesbitt Burns" and "NaviPlan" are registered trade marks of BMO Nesbitt Burns Corporation Limited, used under licence.